Youran Dairy Acquires 58.36 percent shares of Saikexing Reproductive Biotechnology 07-29-2019

On July 11, Inner Mongolia Saikexing Reproductive Biotechnology (Group) Co., Ltd announced that Youran Dairy has purchased 536.066 milion shares of the company at a price of USD331.51 million (RMB 2.28 billion), accounting for 58.36% of the total share. Thus, Youran Dairy, controlled by Inner Mongolia Yili Industrial Group Limited by Share Ltd, became the largest shareholder of Saikexing Reproductive Biotechnology.

Youran Dairy, formerly known as Inner Mongolia Yili Livestock Development Shareholding Co., Ltd, was founded on 1st August 2007. The company was a subsidiary of Inner Mongolia Yili Industrial Group Limited by Share Ltd. on January 5, Inner Mongolia Yili Industrial Group announced to transfer 40% of shares of Youran Dairy at a price of RMB 1.4 billion. Youran Dairy became a solely founded foreign enterprise after the transfer.

Becoming the controlling shareholder, Youran Dairy possibly makes adjustments to primary businesses, management, and regulations

On July 9, 2019, Youran Dairy signed a share transfer agreement with Saikexing Reproductive Biotechnology, purchasing 536,066,738 shares of the company, with a selling price of RMB 4.25 per share. The total value of this transfer is RMB 2.278 billion. According to the additional conditions of the agreement, Inner Mongolia Mengniu Dairy (Group) Co., Ltd. was stipulated to offer the acquirer 14,914,771 shares of Saikexing Reproductive Biotechnology, with a selling price of RMB 63,387,776.75. The acquirer should make a one-time payment. The purchase this time was complete through National Equities Exchange and Quotations.

Youran Dairy becomes the controlling shareholder of Saikexing Reproductive Biotechnology after the acquisition. Youran Dairy will possibly make necessary adjustments to primary businesses, management, as well as the regulations of the company, depending on the future development of Saikexing Reproductive Biotechnology. However, Youran Dairy does not plan to make changes to the company structure, assets disposition, and employment temporarily. If some adjustment is made in the future, Youran Dairy will follow related procedures of laws strictly and an announcement of the adjustment will also be shown to the public. Youran Dairy said the possibility of the adjustment to primary businesses of Saikexing cannot be precluded.

Profit of Youran Dairy increases significantly

According to the report of the acquisition, with China’s policy of further standardizing milk source base, the acquisition of Saikexing Reproductive Biotechnology is in accordance with the development trend of standardization, quality, and modernization.

In terms of the development strategy of Youran Dairy, the acquisition will help enlarge the production scale of Youran Dairy, integrate high quality of milk source, and increase economic effect. This will also help enhance competitiveness of Youran Dairy in the dairy market. Additionally, Saikexing was the first company to own the independent intellectual property right of sex control technology. As a result, the acquisition of Saikexing will help Youran Dairy to produce higher quality milk and to improve integration of the industrial production chain.

On the other hand, in terms of the long-term development of Saikexing, Youran Dairy will also arrange the industrial production chain. The acquisition will also help Saikexing to gain support from the market, finance, technology, skilled labor as well as management. Acoording to Beijing Times, the annual income of Youran Dairy is RMB 6.565 billion, with a profit of RMB 354 million. The income of Saikexing in 2018 was RMB 2.174 billion, an increase of 11.52% compared to the same period last year, with a profit of RMB 107.8 million, a growth of 116.52% compared to last year. This also means that the acquisition of Saikexing will help Youran Dairy increase revenue by more than 30%.

For regular information on China’s dairy market, please have a look at our monthly Dairy Products China News.

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